Innovation, regulation, and excise taxation

Abstract

Innovation and regulation may reduce the harm arising from the production and consumption of excisable goods, which may warrant lower excise rates. However, countries often rely on excise revenues and may face conflicting interests in supporting innovation through differential excise rates and regulation on reduced harm goods and collecting sufficient tax revenues. This paper summarises recent innovations and regulations of excisable goods, discusses their potential implications for the design of excise regimes, and calls for further debate on excise taxes in the face of recent innovations and regulations.